Mixed Signals Ahead: Strong Job Growth Offset by Record-High Diesel Prices
US President Donald Trump is facing mixed signals ahead of the midterm elections as the labor market posts strong growth, but record-high diesel prices put pressure on inflation.
The US Bureau of Labor Statistics reported that employment in the US grew by 162,000 jobs in August, with the unemployment rate remaining steady at 4.1%.
However, the price of diesel hit a new record on Friday, up 55% since the Iran war began in late February, according to the AAA motorists' association.
The strong job growth indicates a healthy labor market, which would allow the central bank to focus on its other mandate: keeping long-term inflation at its 2% target, potentially by hiking interest rates.
Trump responded to the August jobs data by calling for lower interest rates, saying 'Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!' and 'LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.'
Despite the mixed signals, Diane Swonk, chief economist at KPMG, said the August data was 'reassuring', but cautioned that 'one month does not a trend make'. She noted that the labor market is now stronger, which could be worrisome for the Federal Reserve.